Apple stock can either increase 9.54% or decrease 8.71% every month.
a. If the current price is $400, use a binomial tree to determine the possible outcomes for the value of the stock after three months.
b. If the risk free rate is 2%, what is the value of a call option with a strike price of $450 after three months?
c. If the risk free rate is 1% what is the value of a call option with a strike price of $380 after three months?